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Comment by joshuacc | Hacker News Reader

How else do you propose to get a company to build a factory at your preferred location rather than theirs? Paying companies is the usual way to get them to do things.

The economic effects are important but secondary to the national security effects of having TSMC chip manufacturing on US soil.

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I agree with you, and am excited for TSMC fabs in the US. At the same time, I also wonder if this would lead to _less_ defense of Taiwan if we neuter its strategic importance by building those crucial fabs somewhere else. Mind you, this is not an argument against building them. It just makes me wonder what the other effects will be.

At the end of the day it’s a trade-off decision. It’s probably cheaper to build highly subsidized factories in the States than to go to war over Taiwan.

US will still have plenty of reason to defend Taiwan, if only because it is a crucial part of America's containment strategy - China would have a much easier time operating in the Pacific if it controls Taiwan, and the US won't allow that. Further, if Taiwan falls a lot of countries will lose faith in America's ability to protect them from China which would thrust the entirety of South-East Asia into China's hands, also something the US can't afford. Though, with recent claims that China can build 1000 cruise missiles a day[0] it might not matter whether US defends them or not.

[0] https://asiatimes.com/2024/03/america-has-no-ukraine-plan-b-...

They have said they will not build the best and latest here in the US. Many of the fabless companies here in the US want access to that latest stuff and the US is vested in keeping that channel open for market/defense/security reasons.

The Chip Wars book is an excellent read and tells you us the supply chain is globally integrated. If we were to draw a country graph of technology dependence to create semiconductor technology T (tools, chips, etc) - well, there is no DAG. The defense department is not so happy to see all this free market sharing of essential technology going on as it benefits non-friendly nation(s).

The book also illustrated how behind Russia was/is with weapons technology and semiconductors in general (compared to the US).

Yes, Vivek famously already said during his campaign that he'd tell the CCP that we need a few years to catch up on chips and then they can have Taiwan. I'm sure other share this (IMO inhuman, deprived of any morality and allegiance to our liberal western alliance and any foresight) sentiment

Being 2-3 years ahead in chip making(with other closing the gap over time) is not a defence against a potentially WW3 level event. Anyone who thinks millions of life is less important than few percentage increase in performance is delusional. I don't know how this discussion surfaces in HN so many times.

I wish it could be an investment instead of just grants and loans. Could be a way to jumpstart a national sovereign wealth fund.

I disagree. You don't want the government to own things because they would be slow and ineffective at corporate governance. It's better to simply subsidize and let the business owners make the important decisions.

Feels like a self fulfilling prophecy. There’s no reason government can’t be effective at decision making if things are set up the right way (their involvement could be distant). There’s also no reason to assume a giant company (like, say, Intel) is going to be particularly fast at it.

The people in government aren't incentivized to be effective largely because they have no personal financial reason to be. There's no stock options or things like that, no good bonus programs, etc.

What about a competitive salary they lose (i.e. get fired) if they underperform? We’re used to underpaying and overprotecting government employees but if you were setting up a new publicly owned company there’s no reason you’d have to do it that way.

> there’s no reason

The reason as always is politics.

For example, the Federal civil service ("general service") pay scale tops out around $160k. This really doesn't make sense and costs the government multiples of market wages for hiring for roles where market pay is higher than this. One route is to hire that person via a contracting firm with a huge (double or triple) markup.

And of course the reason we don't just revamp the pay scales and pay market wages is because it's political suicide to pay people half a million or more at market rates.

The American people, on average, don't like the level of wage inequality in society. For any particular issue where you shove it in their faces (like proposing to pay the project lead "competitive salary"), you will get shouted down.

That's also why we get strange arrangements like Congress members making around $170k a year with legal insider trading. The insider trading money they make looks like "free" and isn't easily quantified.

Great connection you make on the insider trading! That never occurred to me despite recently being fed up with local mayoral candidates; looking at mayor comp and immediately noping out because a substantial paycut for the pleasure of dealing with the biggest BS imaginable seems rather unattractive.

It's already difficult to fire people in large businesses, but firing people from government is in a whole different level. Especially for performance unless we're talking about extreme underperformance or job abandonment.

What I’m saying is that a publicly owned company has a lot of flexibility in this regard. Employees are not government employees. It’s like a regular private company except the government is the sole shareholder.

My broader point here about self fulfilling prophecy is reflected in your comment: it has been this way, therefore must always be this way. That’s not true.

Turns out that what happens in practice is corporations get chopped up for parts, and government usually does better.

Medicare for example is much more efficient than private health insurance.

The motivation for government employees is "because they care about doing the right thing". You should try it some time.

From working in government, “no, they don’t care about doing it the right way.” The people who get hired are, largely, the ones who will work for the lower salary paid, and plenty lack enough experience and/or capability to even do what they need to. At least in IT.

Here in Norway the government fully owns several "private" companies[1], like Statkraft[2]. They can have bonus programs and similar. Some are too good[3][4], others[5] not quite as wild.

[1]: https://www.regjeringen.no/en/topics/business-and-industry/s...

[2]: https://en.wikipedia.org/wiki/Statkraft

[3]: https://www.nrk.no/norge/statkraft-oker-inntekter-og-bonuser...

[4]: https://www.dn.no/energi/narings-og-fiskeridepartementet/lo-...

[5]: https://www.mesta.no/wp-content/uploads/2023/03/Mesta_Vedleg... (page 2)

> The people in government aren't incentivized to be effective largely because they have no personal financial reason to be. There's no stock options or things like that, no good bonus programs, etc.

I would hazard to guess that most employed people do not have stock options or get bonuses (only salary), but are still "effective" because they consider that doing a job well is its own reward: i.e., they have intrinsic motivation (rather than extrinsic).

I have worked in private sector, and in government (including academia/research), and most folks want to do a job well because they like the satisfaction of being able to know they did the job well.

I'd say it's not that clear cut. Do we have any facts (research) here or are these just beliefs? I can point to several but companies doing very well owned by governments, as well as many doing very badly.

Could be slow and ineffective. It's as likely a company would run it into the ground because of short-sightedness. There are so many examples of government services becoming private company enterprises and in short order everything got worse. But I guess there are equally many examples of the other way around as well.

They would be no worse and probably better than private equity or public markets.

The biggest owner of TSMC is National Development Fund, which is a fund owned by Saudi Arabia. I'm not sure if a US owned fund would be slower and more ineffective in corporate governance than a Saudi owned one.

I think it's actually National Development Fund of the Executive Yuan, which is a Taiwanese fund.

> wish it could be an investment instead of just grants and loans

It’s much more cleanly done with loans.

it is an investment

The USA - the most powerful and richest country in the world - could ... just ... build it.

The US really doesn't do things directly like that, at least not in the last 50 years. Maybe you could point to this and say its wrong, but going through a contractor or company is the way the government typically operates.

Isn’t that effectively what they’re doing? They’re using their riches to pay the people with the necessary institutional knowledge to build it in the USA.

I like this idea and think we should get back into federally building things too.

Another approach would be to apply tariffs to chips coming from adversary countries, until it becomes more economical to produce them in North America.

That would increase costs for US consumers drastically in the interim 20 years it takes to get those fabs online

Taiwan isn’t an adversary.

That’s the problem we are trying to solve: Too many important chips are made there.

>Another approach would be to apply tariffs to chips coming from adversary countries,

But Taiwan isn't an adversary of the USA so why would tariffs be "another approach"?

The Information Technology Agreement of WTO[1] eliminates taxes and tariffs for IT products, I'm not sure if chips belongs to this agreements?

[1] https://www.wto.org/english/tratop_e/dtt_e/dtt-ita_e.htm

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